Chris,
The problem relates to vortex streets, and their generation at the trailing edge of a foil. There's a pretty good explanation here:
http://www.fluidmech.net/gallery/vortex/karman.htm
If you have a round trailing edge, the flow is free to move back and forth as the vortices are formed and shed. With a sharp trailing edge, or a square trailing edge, the flow can only leave the foil at one point, so you don't get the vortex streets being generated.
Winglets work in a slightly different way. On a lifting foil you have a low pressure side and a high pressure side and this results in a tip vortex being generated. The winglets are designed to generate a vortex going in the opposite direction, so reduce the loss of lift at the tip, and so increase the effective span of the foil.
Hope this helps, Nick.